Brent crude oil prices hit $100 per barrel for the first time since 2014 as Russian President Vladimir Putin had approved a special military operation in Ukraine’s Donbass region in the early hours of Thursday morning. Oil prices have jumped sharply, over 80 per cent since the starting of this year. Rising tensions between Russia and Ukraine have sent jitters through markets, driving oil prices higher.
Vladimir Putin announced on in a special televised address on Thursday morning that Russia has been left with no choice but to defend itself against threats from modern Ukraine. “All responsibility for bloodshed will be on the conscience of the ruling regime in Ukraine,” Putin said.
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Brent crude hit a high of $101.34 a barrel in early Asia trade. It was at $101.20 a barrel at 0423 GMT, up $4.36, or 4.5 per cent. US West Texas Intermediate (WTI) crude futures jumped $4.22, or 4.6 per cent, to $96.32 a barrel, after rising to as much as $96.51, also the highest since August 2014, according to Reuters.
Why Oil Prices Jump Today
Russia is the second largest oil producer in the world. It was the largest supplier of natural gas and oil to the European Union last year. The spike in oil prices has been driven by the fears of supply side disruptions. The dramatic move by the Russian President to invade Ukraine, will have a wide ramifications on oil and gas prices across the world.
“Sanctions by the US and other countries forcing Russia to supply less crude or natural gas would have substantial implications on oil prices and the global economy. Russia accounts for one in every 10 barrels of oil consumed globally, so it is a major player when it comes to the price of oil and it’s really going to hurt consumers at the petrol pumps,” said Navneet Damani, vice president – commodity and currency research, Motilal Oswal Financial Services.
“Crude oil prices rebounded strongly reversing earlier losses as reports of cyberattack on Ukraine’s government, foreign ministry and state security websites added to fears about escalating tensions with Russia. Furthermore, prices rose on fears that sanctions imposed by Western allies on Russia could hit energy supplies,” ICICI Direct said.
Brent Crude Oil Price to Cross $110 a barrel?
Oil could go above $100 a barrel due to a combination of the Ukraine crisis, a cold winter in the US, and a lack of investment in oil and gas supplies around the world, Damani added.
“Crude oil is expected to trade with a positive bias for the day amid mounting tension between Russia and Ukraine and forecast of decline in US crude oil stockpiles. Investors fear that sanctions would make it difficult for international buyers to execute their payments for exports and would be forced to look for alternative energy supplies. Meanwhile, markets will keep an eye on talks between Iran and world power over nuclear agreement,” said ICICI Direct in a report.
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